Suzuki puts brakes on U.S. sales

Fort Collins dealer Dellenbach waits for word on what's next.

Nov. 6, 2012

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Mike Dellenbach had 20 brand-new Suzukis parked at his College Avenue auto dealership on Tuesday. In the next few weeks, consumers should see big manufacturer incentives to help Dellenbach move the vehicles off his lot now that American Suzuki Motor Corp. has filed for bankruptcy and will stop selling cars in the U.S.

How big the incentives will be won’t be clear for a few days, but Dellenbach said American Suzuki will continue to honor warranties and sign an agreement with existing dealerships for parts and service. That means even if you can’t buy a Suzuki in Fort Collins or the U.S. you still can have it serviced here.

Dellenbach, which also sells Subaru, Chevrolet and Cadillac, is one of only five dealers in Colorado that sell Suzukis, according to Tim Jackson of the Colorado Automobile Dealers Association. Only two Colorado dealers, one in Denver and one in Colorado Springs, are strictly Suzuki dealers.

“It was a low-volume brand and percentage-wise it was not a big share of the market,” Jackson said. “But if you happen to be a customer who just bought a Suzuki a year ago, I don’t want to understate the frustration they may feel.”

In a statement announcing the restructuring, American Suzuki said it would work with its dealer network to help structure a smooth transition from automobile sales to exclusively parts and service operations, or, in some instances, an orderly wind down of dealership operations.

The company intends to market and sell its remaining U.S. automobile inventory through its dealer network. The challenge for Dellenbach as an organization is for its customers, Jackson said. The industry refers to those consumers as having “been orphaned. They bought a car from a manufacturer in the marketplace at the time they bought it and now they will no longer be in the marketplace,” he said.

The insurance policy consumers have in Northern Colorado, Jackson said, is that Dellenbach is still in business and “Mike Dellenbach and his team will want to continue to take care of their customers.”

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Jackson wondered aloud why the Suzuki brand never really caught on in the U.S. “Suzuki makes a very good car. The puzzling thing is why it didn’t really catch on as a volume brand because it is a very high-quality car.”

Craig Wilson of Wheatridge bought a 2008 Suzuki SX4, a small crossover, at MedVed Suzuki in Denver in late 2007. He said he’s confident Suzuki will honor its 7-year, 100,000-mile powertrain warranty, but worried about the trade-in value of the car. He paid about $18,000 for the all-wheel-drive car, “the least expensive all-wheel-drive you can buy in America,” he said. Now he wonders if he “screwed up” by buying it.

Dellenbach said new cars purchased with the upcoming incentives probably will retain their trade-in values because they will start from a reduced cost. “For an all-wheel drive car like that, even a used one is pretty expensive,” he said.

American Suzuki Motor Corp., based in Brea, Calif., is the sole distributor of Suzuki Motor vehicles in the continental U.S. In documents filed with the U.S. Bankruptcy Court in the Central District of California, the company estimated that its debts and liabilities range from at least $100 million to as much as $500 million. It also said it has between 1,000 and 5,000 creditors.

Once it exits bankruptcy protection, American Suzuki Motor said it will focus on selling Suzuki motorcycles, all-terrain vehicles and marine outboard engines.

It sold 2,023 vehicles in October, which was up 5 percent from the same month last year. Its Grand Vitara sport utility vehicle posted a 64 percent jump in sales last month, although American Suzuki did not say how many of them were sold. In May, the last month it provided a breakdown of its sales, it moved 474 Grand Vitaras, while its biggest seller was its SX4 small crossover, of which 1,101 were sold.

The bankruptcy and reorganization are unrelated to its parent Japan-based Suzuki Motor Corp., which intends to buy the American subsidiary’s remaining businesses and automotive service operation.